Manufacturers Face Tough Economy

Nationwide — Some fitness equipment manufacturers across the country are being hit hard by the slowing economy and rising energy and material costs, but others report they are doing business as usual.

To maximize resources and reduce expenses, FreeMotion Fitness is moving its Colorado Springs, CO, offices to Ogden, UT. The move is accompanied by several layoffs. Customer care, order entry, and shipping and logistics were immediately affected and are now handled by ICON Health & Fitness' current staff in Logan, UT. ICON purchased FreeMotion in 2000.

“We're adjusting to the economic conditions by leveraging the strengths of our corporate parent and maximizing the synergies within the businesses,” says Patrick Hald, president of FreeMotion. “The logistical benefits are tremendous. With cutbacks at retail, price increases for steel, fuel, inflation in Asia and a weak dollar, reducing expenses is vital.”

The new location will house research and product development, while the bulk of manufacturing will remain in Logan, UT.

SportsArt Fitness, Woodinville, WA, had minimal manufacturing line layoffs at its Taiwan manufacturing plant and none at its plant in China, according to a source at the company. Seven people were laid off at its headquarters location, mostly in customer service, where improved efficiencies enabled the company's new customer service manager to re-organize and eliminate some non-essential positions.

The layoffs occurred partly for efficiency and partly as a response to the slowdown in residential product sales. Commercial sales remain strong, the source says, adding that they are up in Asia, Europe and North America.

Nautilus has been experiencing revenue losses for several quarters, and in February, the company announced that it would be transitioning a call center in Winnipeg, Canada, to the company's headquarters in Vancouver, WA. Although calls to Nautilus were not returned for this story, in a call with investors and analysts in April, Bill Meadowcroft, Nautilus' chief financial officer, said that the uncertain consumer environment will continue to affect the company in the second quarter. Second quarter financials for the company had not been released as of press time.

Other manufacturers report no layoffs despite the economic downturn. Well-publicized layoffs at Brunswick, the parent company of Life Fitness, Schiller Park, IL, have been contained to the organization's marine division, a spokesperson for Life Fitness says.

Star Trac also has not been affected, according to the company.

“Star Trac has not had layoffs. Our business is strong, and we are still experiencing double-digit growth,” Randy Bergstedt, vice president of marketing for Star Trac, said in an e-mail response to questions about layoffs.

A Precor spokesperson denies rumors of layoffs, noting that historically, the production workforce at the Woodinville, WA, facility that builds commercial cardio equipment fluctuates seasonally as the company responds to demand.

“The established pattern is that production builds in the third and fourth quarters, and drops off in the quieter times of the first half of the year,” says Jim Zahniser, public relations manager for the company.

Technogym has had no layoffs or production problems, says Enrico Manaresi, spokesperson for the company.

Cybex also hasn't had any layoffs, says Heather Corbitt, spokesperson for Cybex.

At Hoist Fitness, Jeremy Miller, director of marketing and international sales manager, says he could not comment, confirm or deny layoffs.